Issue #29: The Points Behind the Headlines

Fast Company’s latest piece is one long list of grievances about loyalty programs in restaurants: expired points, devaluation in rewards, constantly changing programs. Dunkin’ and Starbucks get the worst shakedown (full disclosure: I made one of those changes and I’d do it again). But I can’t disagree with a lot of the article’s facts. Many I wrote about in Issue #2—the fine print flaws that are killing programs. But the writer questions why consumers continue to join and engage despite low program satisfaction scores and so much angst. I could have given him the answer: it’s because nobody really joined.

In most restaurant programs, loyalty lives in the app or online, hand in hand with ordering. Joining is a default check box or a phone # into a pin pad. When opting in is nearly automatic, staying in proves nothing. I know of a restaurant program that grew to 40% of sales from loyalty in just a few months due to staff capturing a phone # on every transaction. Every order earns points whether you know it or, frankly, care. We’ve become obsessed with bloated program metrics thinking they prove their worth. They don’t.

Restaurant programs have conflated growth with effectiveness, and as someone who lived this in a prior life for years, the pressure is real. The program ROI is complicated enough for loyalty practitioners to accurately figure out, much less explain to the rest of the org who aren’t close to it. So we default to vanity metrics because they sound great on earnings calls, in decks and on stage. But the real loser is the consumer, because a big program becomes an expensive program which becomes a devalued program.

This week Bilt and Hilton announced a transfer program where Bilt members can transfer Bilt points and receive status through year end for as little as 1,000 Bilt points, with the opportunity to keep it through 2027 with stay challenges. Recently, United announced a status match for Delta and American so they can “try out Starlink”, just by spending a certain amount in a short period of time. Back in August it was revealed there was a loophole in China where Marriott Platinum could be bought for $15.

The list goes on and on. Case in point: I went from United Global Services all the way back to Silver, and was offered Gold for the small sum of $5K. No thank you.

I have no issue with programs where paying for status is the product, whether that be card annual fees or membership dues. But programs built on “earn it” that then let you buy your way in, I see as increasingly problematic in our industry. Earned status tells you who your best customers are. Bought status does not because it’s a shortcut and a short-term contract. It puts members on different playing fields, and most don’t know the rules. It’s contributing to elite status bloat, and then elite benefit erosion.

Brands should pick a lane: status is either earned or it’s for sale. Not both.

I’m usually the one arguing that too much choice in loyalty is a bad thing. Consumers really don’t want to design their own program. They want to know what they’re getting and then have flexibility in how they use it. The new Atmos program has a lot of choice. Pick how you earn—distance, segments, dollars. Complicated? Yes. Ambitious and likely to still pay off? Yes. Now they launched Communities. I expected to pile on that now it was really too much choice. Instead…. I love it. 😍

Here’s how it works: Join one of six communities with switching only once a year. Two are for Alaska/Hawaii residents only. Four are open to everyone: Global Locals, Families on the Go, Culinary Journeys and Active Escapes. Each has perks based on how you travel. Examples: Families get 20% of their points back on award tickets for kids; Food and outdoor travelers get bonus points on themed destinations. The benefits are all good, generous and simple. But the real win is the idea.

Consumers love a label. But in loyalty, a tier tells them how much they spent. A community tells them who they are. It’s zero-party data gold for the CRM team, a talking point for the member, and a differentiator I haven’t seen at this scale. Bravo, Atmos.